TÁNAISTE Leo Varadkar has said the Government needs to examine the introduction of a new vacant homes tax.

In a letter to his parliamentary party on Wednesday, Mr Varadkar said the idea of a levy on homes that lie vacant should be looked at again, along with a series of other measures to tackle the housing crisis.

A report for the Department of Finance in 2018 recommended against introducing the tax at the time, but the idea has re-emerged in recent months following reports of large numbers of units in apartment blocks in Dublin and elsewhere lying vacant. Labour has proposed tax on homes that lie vacant for more than six months.

The Fine Gael leader has also said that the role of Approved Housing Bodies and local authorities in being able to bulk buy housing estates needs to be re-examined.

His comments come less than 24 hours after Housing Minister Darragh O’Brien announced plans to exempt these bodies from new rules clamping down on the bulk buying of new housing estates by so-called cuckoo funds and on the same day he issued a circular to this effect.

“I think we will need to re-examine the role of Approved Housing Bodies and Local Authorities which will continue to be allowed to bulk buy housing estates, look again a (sic) vacant home tax and examine long-term lease arrangements where the asset does not revert to state or occupant at the end of the lease,” Mr Varadkar wrote in an email to his party.

Mr Varadkar sent the email on Wednesday afternoon as he will not be present at the Fine Gael parliamentary party meeting due to a Trade Council meeting in Brussels. The meeting is due to hear from Mr O’Brien, who is a Fianna Fáil TD.

Mr Varadkar stated in his email that the policy actions announced by Government on Tuesday were “not the last policy action we will take to improve the position of first-time buyers who want to become homeowners and existing homeowners and families who want to upsize (or downsize)”.

He also defended the role of the private sector in the housing market, insisting that private development and finance was needed in addition to public spending.

“We need to build about 35k new homes every year for the next ten years. It will cost about €120bn to finance the construction of these 350k new homes. That’s much more than the bank bailout and pandemic combined,” he said.

“There is no way the state or public could take on that level of debt at any interest rate so we do need private developers and private finance as well as public investment."

Mr Varadkar also told his party that it is “perverse that there are so many people who could pay less by paying a mortgage than they do paying rent if only they could get sufficient mortgage approval or find a home they can afford. We have to put that right”.

The Tánaiste said the measures announced on Tuesday, including a 10pc stamp duty on bulk buying of 10 or more homes in a year anywhere in the country, will “clip the wings of investment funds when it comes to buying up houses and duplexes in our towns and cities”.

Mr Varadkar said it is open to the Government to raise the rate further if it turns out not to be effective in curbing the influence of cuckoo funds.

He also defended the exemptions from the new tax for apartment blocks, saying: “It will still be possible for institutional investors to block buy apartments as we believe that without this form of finance, most apartment blocks simply would not be built thus resulting in reduced supply and all the consequences that arise from that – even higher prices, rents, overcrowding etc.”

Speaking at the Fine Gael meeting, Mr O’Brien outlined plans to set up a new local authority project management team to give councils extra resources to deliver 9,500 direct-build homes per annum. He cited the example of Cavan County Council which currently has only two engineers.

Mr O’Brien said he would be meeting local authorities later this month to reinforce the Government's message that councils need to build housing stock.

He also said he was working on legislation to replace rent pressure zones, which are due to expire by the end of the year, saying a new regime would draw on the experience in other European countries.

He said the Government would launch the Housing for All plan to achieve 33,000 new homes per annum in July. He said it would be a multi-annual funding programme with specific year-on-year targets across each county for social and affordable housing with an investment of €12bn per annum.

He also said he was working on the regulation of online letting platforms, such as AirBnB, with Tourism Minister Catherine Martin and that he hoped this work will be concluded before the end of the summer. Under the new plan a property could not be advertised on the platform without the requisite planning permission having been obtained, Mr O'Brien said.

Mr O’Brien noted he had crossed the “political Rubicon” by addressing the meeting, but he was praised by several contributors.

Party chair Richard Bruton praised the "great energy" Mr O'Brien was bringing to the housing portfolio, while backbencher Fergus O'Dowd praised the minister's "grasp" of his brief.

Backbencher Charlie Flannagan, who originally proposed the meeting, said he regretted that the engagement had been portrayed as divisive in advance.

Earlier, Finance Minister Paschal Donohoe told the meeting the 10pc stamp duty on bulk purchases was a “very simple, very blunt and very powerful” measure to curb the influence of investment funds in the property market.

He said it would work but that the Government would monitor it carefully to ensure it has the right effect.